Variable rates declined, but fixed rates rose and new loan applications dropped.
The average 30-year fixed-rate mortgage rose 9 basis points from last week to 4.91% for the week ended May 28, according to Freddie Mac's survey of 125 thrifts, commercial banks and mortgage lenders. The average 30-year was 6.08% during the same week last year.
Freddie's regulator, the Federal Housing Finance Agency, reported today that the average rate on conventional 30-year mortgages declined 18 BPS to 4.87% in April. The results reflected data on loans closed between April 24 and April 30.
Freddie reported the average 15-year fixed-rate mortgage at 4.53%, 3 BPS higher than the prior week. The spread between the 15-year and the 30-year -- 38 BPS -- is the widest since March 12 when it stood at 39 BPS.
The yield on the benchmark 10-year Treasury note -- which had risen to 3.707 late yesterday -- was 3.637% late today. A week earlier, the 10-year yielded 3.346%. The weekly increase suggests fixed mortgage rates may head even higher.
Nearly two-thirds of the 100 panelists surveyed by Bankrate.com for the week May 28 to June 3 predicted rates will rise at least 3 BPS during the next 35 to 45 days, while the rest forecasted a decrease.
The average for the five-year Treasury-indexed hybrid adjustable-rate mortgage edged up 3 BPS to 4.82%.
Meanwhile, the one-year Treasury-indexed ARM slipped 13 BPS to average 4.69%. The underlying index, the yield on the one-year Treasury bill, climbed to 0.49% yesterday from 0.44% seven days earlier, according to data from the U.S. Department of the Treasury.
Bankrate.com reported that the six-month London Interbank Offered Rate, or LIBOR, decreased to 1.22% yesterday from 1.28% one week earlier.
The improvement in ARM yields as fixed rates rose helped push the ARM share of loan applications tracked in the Mortgage Bankers Association Weekly Mortgage Applications Survey for the week ending May 22 to 2.6% from 2.4% the prior week.
But strengthening ARM activity was not enough to help loan activity; MBA said overall applications were down 14% on a seasonally adjusted basis from a week earlier. A 19% drop in refinances led the decline and pushed refinance share down to 69% from 74%.
Purchase applications were up 1%, according to MBA.